Anurag Malik vs Sh. Amit Malik And Anr. [Along With ...
2005 Latest Caselaw 1722 Del

JUDGMENT

Sanjay Kishan Kaul, J.

Page 2678

1. The two execution petitions have been filed both for execution of the award dated 03.06.2001 of Sh. B. M. Khurana, Sole Arbitrator. Objections have been filed to the execution and the said objections were heard at length. On the last date of hearing, the parties had taken some time to see whether some amicable settlement would be possible taking into consideration the nature of dispute being a family dispute. That has not been done possible and thus the matter has to be decided on merits.

2. The two decree holders who have filed the execution are Mr. Amit Malik and Mrs Kamlesh Malik. Smt. Kamlesh Malik is the mother of Mr Amit Malik and Mr. Anurag Malik. The objections have been filed by Sh. Amit Malik. The Page 2679 award has been made and published under the Arbitration and Conciliation act, 1996 (hereinafter referred to as the 'said Act'). No objections to the award under Section 34 of the said Act have been filed by the parties. However in the objections filed to the execution, a plea has been raised that the time period for filing of the objections had not started in view of the fact that no copy of the award was served on the objector.

3. The aforesaid objection arises from the fact that according to the objector though the award is singed by the parties, it is not dated. There is no dispute that the award bears signatures of the parties. It is the submission of the objector that the said award is the original award which was signed by the parties and was not dated. Subsequently a copy of the award was engrossed on stamp paper and was registered with the Sub Registrar. It is thus the submission of the objector that such a procedure could not have been followed and copy of the award which has been registered has been handed over to the objector.

4. The award which has been registered is dated 03.06.2001. The same is on a stamp paper of Rs 75. The date of purchase of stamp paper is 28.05.2001 and the award was registered on 10.01.2002.

5. The objections of the judgment debtor as contended by senior counsel can be summarised as under:

i) No copy of the award which has been registered was served on the respondent and thus the occasion to file any objection under Section 34 of the Act did not arise;

ii) The original award is the award which has not been registered and thus it is not permissible in law to register a copy of the said award. Thus the defect of non registration of the award cannot be cured by the subsequent stamping and registration of a copy of the award.

iii) The registration of the award is not in accordance with law as the award is not within the period stipulated under Section 23 of the Registration Act, 1908 (hereinafter referred to as 'the Registration Act) providing for a four months' period of time for its execution. Section 25 of the Registration Act further stipulates an extension of four months in case of non presentation due to urgent necessity or unavoidable accident on payment of fine.

iv) The award is not stamped in accordance with the Stamp Act, 1899 (hereinafter referred to as 'the Stamp Act') since it is an award partitioning the properties and thus was liable for payment of stamp duty at ad valorem rates in terms of Entry 45 of Schedule 1 of the Stamp Act as an instrument of partition includes an award within the meaning of Section 2(15) of the Stamp Act. When the document is not properly stamped, procedure prescribed in Chapter IV of the Stamp Act must be followed and the document must be impounded and sent to the Collector of Stamps in terms of Section 33 of the Stamp Act and such a document would be inadmissible in evidence in view of provisions of Section 35 of the Stamp Act.

6. It would be appropriate to consider each of these objections separately.

Page 2680

7. Insofar as the first objection is concerned, the stand of the petitioner is that the original award was drawn on stamp paper and was duly signed. Copies of the award were made available to all the parties and signatures of the parties were obtained on the copy. It is thus submitted that the original award is the award which has been registered and not the award on which signatures of the parties have been obtained. It is submitted that such a practice is not unusual and specially taking into consideration that the matter was a family dispute which was referred to an elder of the family for settlement.

8. Insofar as the registration of the award is concerned, there is no dispute. Learned counsel for the Judgment debtor/objector has attempted to throw some doubt on account of the fact that the identification given in respect of the second witness Dr. Sunil Sekhri is the ration card dated 19.09.2001 even though the award is dated 03.06.2001.

9. I do not find merit in the aforesaid submission for the reason that an award is not liable to be witnessed. The award has apparently been witnessed subsequently and it is not in dispute that the award was presented for registration on 10.01.2002. Date of the ration card is certainly much prior to the date of registration.

10. The factum of objector signing on a copy of the award is admitted. It may be noticed at this stage that the objector did try to make out a case that a number of blank documents were signed and the copy of the award is actually one such blank document which was signed by the objector. This plea is difficult to accept for the reason that the award is a typed award and is signed at appropriate places. Not only that the objector is not an uneducated person who would sing documents without Realizing the consequences thereof or would be expected to sign such blank papers. The objector here also acted in pursuance to the award as explained later on. The practice of the presentation of the original award for registration and taking endorsement on copies thereof cannot be said to be an unusual practice which would create doubt on the award itself. It has also to be kept in mind that the nature of proceedings relate to a family dispute wherein an elder of the family was put in as an arbitrator to arrive at a settlement between the mother and the sons.

11. In view of the aforesaid, I am of the considered view, that it is the original award which has been presented for registration before the Sub Registrar and signatures of the parties have been obtained on copies of the award.

12. Learned counsel for the judgment debtor submitted that the award must be dated in view of provisions of Section 31(4) of the said Act and has relied upon judgment in Mahanagar Telephone Nigam Limited v. Siemens Public Communication Network Ltd; 2005(1) Arbitration Law Reporter 369 (Delhi). This again cannot be disputed as a proposition of law but in view of the original award being signed, dated and registered by the arbitrator, the objection does not survive for consideration.

13. The second plea raised is about non registration of the award and the fact that the defect of an award not being properly stamped cannot be cured by getting a copy of the same stamped and registered subsequently for which Page 2681 purpose, learned counsel for the objector relied upon the Judgment of the apex court in Rikhabdass v. Ballabdas; wherein it was observed in Para 8 as under:

"...It is true that Section 41 of the Arbitration Act makes the provisions of the Code of Civil Procedure applicable to proceedings before a court under the Arbitration Act. But it is well known that after making his award the arbitrator is functus officio. To cite one authority for his proposition we may quote the observations of Mellish L.J. In Mordue v. Palmer, (1980) 6 Ch A 22 at page 31.

"I think the result of the cases at law is that when an arbitrator has signed a document as and for his award, he is functus officio and he cannot of his own authority remedy any mistake."

In the present case, ex hypothesi, the award has already been made and the arbitrator has therefore become functus offico. It is that award which requires stamp. Section 151 of the Code cannot give the court power to direct the arbitrator to make a fresh award; that would be against well-established principles of the law of arbitration. It would again be useless to have another copy of the award prepared and stamped for the copy would not be the award and no action in a court can be taken on it. The order cannot therefore be supported by section 151 of the Code. It is of some interest to read here the following passage from Russel on Arbitration (14th Edition) page 325:

""The usual practice in preparing an award is to have two copies made of it. One the arbitrator signs, which then becomes the original award, and this is delivered to the party who takes up the award. The other copy is available for the other parties if they apply for it."

"The original award before it is available for any purpose whatsoever, must be duly stamped, but there is no obligation upon the arbitrator to stamp it, and he does not usually do so."

We should observe here that the last paragraph in the aforesaid quotation does not appear in the 16th edition of Russel's work. Perhaps this is because in England an award is no more required to be stamped by virtue of Section 35 Schedule 8 of the Finance Act, 1949 which was passed after the 14 the edition was published."

14. There can be no dispute about the aforesaid proposition that merely by getting a copy of the award subsequently stamped and registered, the defect of an award which is not engrossed on a stamp paper cannot be cured. However the finding aforesaid recorded is that it is the original award which has been duly presented for registration and thus though there is no dispute about the principle of law, the same would have no application to the facts of the present case.

15. The next contention raised by the objector relates to the requirement of registration under Section 23 of the Registration Act. The said section reads as under:

"Time for presenting documents. Subjects to the provisions contained in Sections 24, 25 & 26, no document other than a Will shall be accepted Page 2682 for registration unless presented for that purpose to the proper officer within four months from the date of its execution:

Provided that a copy of a decree or order may be presented within four months from the day on which the decree or order was made, or where it is appealable, within four months from the day on which it becomes final."

16. There is a provision for extension of four months' time in terms of Section 25 of the Registration Act. The special provision reads as under:

"Provision where delay in presentation is unavoidable 1) If, owing to urgent necessity or unavoidable accident, any document executed, or copy of a decree or order made, in India is not presented for registration till after the expiration of the time hereinbefore prescribed in that behalf, the Registrar, in cases where the delay in presentation does not exceed four months, may direct that, on payment of a fine not exceeding ten times the amount of the proper registration-fee, such document shall be accepted for registration.

2) Any application for such direction may be lodged with a Sub Registrar, who shall forthwith forward it to the Registrar to whom he is subordinate."

17. Learned counsel for the objector submits that there is no proper application made for adjudication whereby such extended time was granted under Section 25 of the Act. It is thus submitted that mere registration of a document will not imply that the document has been registered in accordance with law or that the objector is precluded from raising such an objection.

18. Learned counsel for the objector in this behalf referred to the Judgment of the Division Bench of the Assam High Court in Nandeshwar Chakarvarty v. Mahendra Nath; 1956 Assam 123 where it was held that in case a party seeks to rely on a registered document on the face of which it is obvious that it was presented for registration beyond four months of its execution, the onus lies heavily on the party to show that the requirement of law had been fulfillled before it can be assumed by any court that the document had been registered within the meaning of Section 25 of the Registration Act. Learned counsel also referred to the Division Bench Judgment in Chindhu v. Ramewarnath AIR 1927 Nagpur 30 to contend that where registration is in contravention of any provision of law, whatever be the cause that led to the contravention, it is ineffectual and must be ignored.

19. Learned counsel for decree holder on the other hand contends that the registration has taken place within time stipulated of four months in view of proviso to Section 23 of the Registration Act. Learned counsel submits that the proviso to Section 23 stipulates that a copy of a decree or order may be presented within four months from the day on which the decree or order was made, or, where it is appealable within four months from the day when it becomes final. In this behalf learned counsel has referred to the provisions of Section 36 of the said Act which reads as under:

"36. Enforcement: Where the time for making an application to set aside the arbitral award under Section 34 has expired, or such application having been made, it has been refused, the award shall be enforced under the Page 2683 Code of Civil Procedure, 1908 in the same manner as if it were a decree of the court."

20. A perusal of the aforesaid provision shows that when the time for making an application to set aside the arbitral award under Section 34 has expired or such application having been made has been refused, the same has to be executed as if it is a decree of the court.

21. The provisions of Section 34 provide for an application for setting aside the arbitral award. Such an application has to be made within a period of three months from the date on which the party making the application has received the arbitral award. Section 34(3) reads as under:

"An application for setting aside may not be made after three months have elapsed from the date on which he party making that application had received the arbitral award or it a request had been made under Section 33, from the date on which that request had been disposed of by the arbitral tribunal:

Provided that if the court is satisfied that the applicant was prevented by sufficient cause from making the application within the said period of three months it may entertain the application within a further period of thirty days, but not thereafter."

22. It is thus the submission of the learned counsel for the decree holder that first three months period of time must lapse and thereafter only would an award become executable as a decree under section 36 of the Act. It is thus submitted that the period of four months for registration of the award within the meaning of proviso to section 23 of the Registration Act would commence only on the expiry of the period of three months plus thirty days as provided in Section 34(3) of the Act. The proviso to Section 34(3) provides that in case of sufficient cause being shown an application can be entertained under Section 34 of the Act within a further period of thirty days and not thereafter. It is thus the submission that if all these periods are taken into account, the registration of the document is within the stipulated period of time.

23. It has to be kept in mind that the provisions under the new Arbitration Act are different from those under the Indian Arbitration Act, 1940 where an award had to be made rule of the court and a decree passed in terms thereof before the same could be executed as a decree. In case of an award under the said Act of 1996, the award itself is executable as a decree. The proviso to Section 23 of the Registration Act provides and takes care of the position where the period of four months would commence from the time when such decree would become executable. A decree would be executable under Section 36 of the Act only when the time period as provided under Section 34 of the said Act expires. The said time period is three months under Section 34(3) extendable by another 30 days within the meaning of proviso 34(3) of the said Act. Thus the presentation of the document for registration on 10.01.2002 is within the time period stipulated if the aforesaid period is taken into consideration as provided in Section 34 of the Act read with Section 36 of the said Act and Section 23 of the Registration Act. The question of an application being made under Section 25 of the Act would arise only if the period of four months had elapsed and the further period was sought to be Page 2684 taken into account. This also appears to be the reason that the registering authority has registered the document without any objection.

24. I am thus unable to persuade myself to agree with the submission of the learned counsel for the objector that the document is not registered within the time stipulated.

25. The last submission of the learned counsel for the objector related to the document being insufficiently stamped under the provisions of the Stamp Act. It cannot also be in dispute that in case the document is so insufficiently stamped, it is required to be impounded under Section 33 of the Stamp Act and sent to the Collector of Stamps for appropriate adjudication. The aforesaid plea is advanced on the basis of the provisions of Section 2(15) which reads as under:

"'Instrument of partition' means any instrument whereby co-owners of any property divide or agree to divide such property in severalty, and includes also a final order for effecting a partiton passed by any revenue-authority or any Civil Court and an award by an arbitrator directing a partition;"

26. A reading of the aforesaid provision shows that an instrument of partition means an instrument whereby co-owners of any property divide or agree to divide said property in severalty and includes also a final order for effecting partition passed by any revenue authority or Civil Court and is also inclusive of an award by an arbitrator directing a partition. The expression used is "arbitrator directing a partition". In case of such a document, as per Entry 45 of Schedule 1, the duty payable on such instrument is the same as is payable on a bond for the amount of the value of the separated share or shares of the properties and the largest share remaining after the property is partitioned shall be deemed to be that from which the other shares are separated. It is not disputed that if the award in question is in fact partitioning properties then the said stamp duty would be payable.

27. The submission of the learned counsel for the decree holder however is that the award itself does not partition the property and thus would not fall within the definition of Section 2(15) of the Stamp Act where the expression used is "award by an arbitrator directing a partition" In this behalf learned counsel for the decree holder has referred to the contents of the award. The immoveable properties are four in number being property bearing no A-20, Mahendru Enclave, near Gujranwala Town, New Delhi-33 and shop at Sadar Bazar having business of M/s Malik Light House, which was a tenancy and a godown at Sadar Bazar and a flat at Apna Villa. The award reads as under in respect of these four:

"PROPERTY BEARING No. A/20, MAHINDERO ENCLAVE, NEW DELHI

11. Smt. Kamlesh Malik shall execute necessary documents of transfer in favor of Sh. Anurag Malik in respect of the basement, first and second floor with roof except ground floor which shall remain in the possession of Smt. Kamlesh Malik.

12. Similarly Sh. Amit Malik and Sh. Anurag Malik shall execute documents of transfer in favor of Smt. Kamlesh Malik in respect to the Godwon at Sadar Bazar and also the flat at Apna Villa

Page 2685

SHOP AT SADAR BAZAR M/S MALIK LIGHT HOUSE

13. Similarly Smt. Kamlesh Malik and Sh. Anurag Malik shall execute documents of transfer in favor of Sh. Amit Malik.

14. Further the value of assets, stock, creditors, cash in hand in respect of Ms. Malik Light House, Export firm in India and abroad along with debtors, loans, interest to be paid shall be divided equally amongst the three partners on the finalisation and distribution."

28. Learned counsel for the decree holder submits that the award states the manner the division would take place, but the division is to actually take place only on the execution of the necessary documents of transfer in favor of respective parties. It is thus submitted that a reading of the award itself shows what is envisaged is transfer on the execution of such documents.

29. Learned counsel for the decree holder in this behalf has referred to the Full Bench Judgment of this Court in the matter of Hamdard Dawakhana (Wakf) Delhi to contend that it is the dominant purpose which has to be seen. A single instrument may embody several purposes and the test for distinguishing a "bond" from an "agreement" was taken into account to arrive at the conclusion.

30. Learned counsel for the decree holder submitted that the duty is to be determined with reference to the instrument and not the transactions. Learned counsel referred to the Judgment of the Madras High Court in The Chief Controlling Revenue Authority, Madras, Board of Revenue Madras, Referring Officer v. The Canara Industrial and Banking syndicate Ltd., Madras and Ors.; to contend that where an instrument is executed but conditions validating transfer of rights are absent, the instrument need not even be registered. In this behalf the definition of 'executed' under Section 2(12) of the Stamp Act was referred which would mean both signing and execution.

31. Learned counsel also referred to the Judgment of the Queens Bench Division in The Commissioners of Inland Revenue v. G. Angus & Co. & The Same v. J. Lewis and Sons1889 23 QBD 579 which has in fact also been referred to in the aforesaid Full Bench Judgment of the The Chief Controlling Revenue Authority, Madras, Board of Revenue Madras, Referring Officer v. The Canara Industrial and Banking syndicate Ltd., Madras and Ors. (Supra).

32. Learned counsel for the decree holder also referred to the judgment of the Full Bench of the Madras High Court in Crompton Engineering Co, Ltd. v. Chief Controlling Revenue Authority, Madras; to contend that while dealing with an instrument and construing the same for stamp duty, the following observations were made:

"(11) The very difference between the definition of an instrument in Section 2(14) and a mortgage deed in Section 2(17) should show that the "transfer" provided for in Section 2(17) is a transfer valid in law. To make a document liable to stamp duty as a mortgage deed, it is not enough if the document purports to effect a transfer. It must "transfer"

Page 2686

33. It is thus contended that the it is not enough that a document purports to effect transfer but the document itself must transfer. The judgment cited by learned counsel for the objector in Sh. Harish Chander Sharma v. Smt. Priti Sharma etc 2nd (1976) I Delhi also refers to the requirement of ad valorem stamping of an award 'directing a partition'.

34. A reading of the award shows that the same contains what would be the entitlement of each party and in that behalf pages 4 to 6 specify what would devolve on each of the parties including the immoveable properties. The award envisages that the transfer would take place on documents being executed by the respective parties in favor of other parties. Such documents would naturally be liable to be registered since they would convey immoveable property. Such documents are also required to be stamped in accordance with law. Thus it is not as if the award in question itself has partitioned the properties but has directed certain documents to be executed which in turn would convey title to the property in question. If anything more was required to be done other than rely on the partition deed, then there would be force in the submission of the learned counsel of the judgment debtor/objector that the document is not properly stamped. This is not the position in the present case.

35. In the end one more aspect may be noted. Out of two properties, one of the properties is a shop at Sadar Bazar. This property had to fall to the share of the objector. The objector has undisputedly got registered title documents in respect of this property in question in his favor. It is of course contended by learned counsel for the objector that such transfer has not taken place on account of any documents executed by the decree holders but by reason of an arrangement arrived at with the landlord. Be that as it is, if all the parties had a share in the business and the shop, it can hardly be pre-supposed that such transaction would take place without the consent of the other parties. It must thus be presumed that to that extent objector has even acted upon the award as referred to before.

36. In my considered view, it is wholly inappropriate for the objector now to back out of the award having enjoyed what would come to the objector on implementation of the award. No doubt that the objector would be deprived of residence in the residential house, but that is the sub stratum of the award whereby the objector has been given complete business and the shop while the remaining portion is divided between the mother and the other brother.

37. In view of the aforesaid, I do not find any merit in the objections and the same are dismissed leaving parties to bear their own costs.

38. In view of the objections being dismissed, the objector is granted one month's time to execute the documents in terms of the award and to hand over possession of the decree holder. The judgment debtor-objector has also to pay amounts in terms of award within the same period of time. In case the needful is not done within thirty days period of time, coercive process would have to be taken.

39. List on 31.01.2006 for consideration.